BYD applies brakes to Brazil factory plans amid incentives plea

China's BYD could delay the full ramp-up of its 400MW module plant in Brazil by about a year and has put on hold plans to produce PV cells locally as it awaits further government incentives.

“Without the incentives, it is cheaper to import solar panels so we'll produce according to demand,” Adalberto Maluf, BYD's marketing director told Recharge.

Maluf said that it has pre-commercial agreements for delivery of panels for about 30% of the 929MW of AC capacity contracted in last week's auction, 15% of the 833MW won in August, and around 30% of the 890MW contracted in October 2014.

These projects have to be up and running by 2018 and 2017.

BYD will initially import, although the factory grounds are ready for the installation of machinery that should arrive in January and February 2016.

“Once the machines arrive, we can start producing in six months,” said Maluf.

BYD plans to end 2016 with capacity for 150MW, ramping up to the announced level of 400MW by the beginning of 2018 instead of the beginning of 2017, he said. The company is also opting for simple glass fittings initially, instead of its double-glass technology.

The Brazilian solar industry has been lobbying for the federal government to include tax breaks for machinery and raw materials for the PV industry in its PADIS programme, which is designed to help the semiconductor sector but which solar hopes to get a slice of.

According to the Brazilian Solar Power Association (Absolar), the non-inclusion of solar photovoltaic components and their raw materials in PADIS raises final cost of solar power by 20% to 30%.

“If the government is not able to solve this, the sector will decide to import equipment,” Absolar's executive director Rodrigo Sauaia told Recharge immediately after the auction.

He said that foreign module makers are waiting to see whether the government will approve these incentives before confirming investment plans in local plants to supply Brazil's booming solar market, which should reach 7GW by 2024 from just 30MW today.

Brazil's National Development Bank BNDES said that about 10 module makers are seeking local-content compliance. Among them are Canadian Solar and SunEdison, which announced plans but haven't yet confirmed. Other foreign companies active in Brazil's solar market such as JA Solar, First Solar, and Yingli Solar haven't yet said whether they will produce locally.

JinkoSolar, which won contracts for over 500MW in recent auctions, especially for projects controlled by Enel Green Power, said it prefers to import at the moment.